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Between ICASA, NCC in African telecom devt

By Prince Osuagwu

WITH unfolding events in recent time, it could not have been an accident that the Nigerian telecommunications market zoomed past that of South Africa, which has dominated the lead for decades.

Although, easily dubbed the dumping ground of unwanted foreign technologies, what no one would deny the market is its liberal stature and openness to allow fellow African markets tap into the gains of her huge population and virgin market.

With over 70 million subscriber base and a gross $18 billion in total investment over the last eight years, Nigeria’s telecom market strongly flies the African flag, directing all world business suitors to the continent.

Taking a look at the African market indices, it was discovered that while subscriptions rose 32 per cent in the rest of Africa, Nigerian mobile market grew by 41 per cent year on year in the first quarter of 2009. Even in revenue generation, while the whole of Africa has a total of about $11bn in service revenue in the first quarter of the year, Nigeria generated $2.02bn in service revenue in the same first quarter, representing 18 per cent of Africa’s total service revenue generation.

However, the country did not achieve that by magic. It pursued a carefully designed deregulation policy in telecoms sector which was championed by the Nigerian Communications Commission, NCC, allowing investors to come in, develop the market and have it rub- off on the entire continent.

For instance, a critical examination of the operators in Nigeria, shows that the only one dominant GSM/WCDMA network operator, MTN Nigeria is a member of South Africa MTN Group.

MTN grew subscriptions in the period under review, generating almost the same level of net additions as in 2008. MTN’s blended ARPU level was $13 mainly due to its strong share of the high-end and business segments. MTN’s service revenues in the first quarter of 2009 increased slightly to about one per cent from the first quarter of 2009 peaking at $955m.

Another major operator, Zain, though registered in Nigeria, is a Middle East and Africa operator.  Zain and Nigeria’s second national operator (SNO), Glo Mobile  recorded subscriber losses as they disconnected large numbers of inactive SIM cards.

Zain’s total revenue decreased 21 per cent from $449.7m by the end of 2008 to $356.7m in the first quarter of 2009. This is as, Glo Mobile’s ARPU fell from $10 in Q108 to $6 in Q109.

Multilinks, a Nigerian CDMA operator was bought over by South Africa’s Telkom in the period under study and its entry into the Nigerian market has greatly increased South Africa’s stake in the country’s telecommunications space.

But there are still grumbles among Nigerians that the rate at which Nigeria allows South African investments to enter and thrive in the market was directly the opposite in South Africa. In fact, Nigeria is said to have a zero level presence in that country.

It has become so much a worry that even Vice President Goodluck Jonathan while declaring open the 10th Nigeria-South Africa Bi-National Commission (BNC) in Abuja, recently, decried the lopsided business environment in favour of South Africa.

Jonathan was bitter that “bilateral relations have yielded enormous benefits for South African entrepreneurs with investments in Nigeria, while there are little or no opportunities for Nigerians to do real business in South Africa”. Jonathan’s statement seemingly questions the much advocated intra Africa trade policy by the African Union AU.

Another case that could prove Jonathan right is the rumblings in Nigeria’s telecom sector recently over the landing license granted a South African promoted submarine cable, the West Africa Cable System, (WACS) by the NCC.
Even when NCC actually acted in good faith and within the existing laws of the Federal Government of Nigeria including the Nigerian Communications Act 2003 which require the Commission to protect competition and not specific competitors, Nigerians were enraged that the same license Nigeria’s regulator openly granted WACS was denied a Nigerian company, MainOne Cable Company, which is laying a 14, 000 km submarine fibre optic cable from Seixal, Portugal to West Africa.

MainOne’s cable project has initial landing points in Accra, Ghana and Lagos in the first phase and to South Africa in the second phase. The company has been crying foul over a repeatedly denied landing licence by the Independent Communications Authority of South Africa, ICASA.

The MainOne Cable which received pioneer submarine cable landing licences in Nigeria and Ghana in 2008 is expected to land its cable in May 2010 and become ready-for-service in June 2010.

Its 1.92Tbit/s design capacity is more than 10 times what is readily available with the existing SAT-3 submarine cable. It is expected to provide international bandwidth capacity to Nigeria and the entire ECOWAS region which has witnessed tremendous telecommunications growth in the last 10 years, but is still largely constrained by lack of cable capacity for global connectivity. MainOne is also expected to considerably minimize the difficulties of switching traffic between African countries and eliminate the inconveniences and added cost of first routing traffic to Europe.

Apart from MainOne, the South African authorities have also been accused of blocking other potential Nigerian investors due to its policy of majority stakeholding by its nationals in any foreign company which expresses interest to invest in the country.

Now industry watchers are asking the question: If MainOne is finally denied landing license in South Africa, and have its dream of boosting African broadband penetration scuttled, who among NCC and ICASA, is truly growing the African economy? And is this not the type of question that could send AU back to the drawing board, on Intra Africa Trade Policy crusade.


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